Correlation Between AP Mller and Danske Invest

Can any of the company-specific risk be diversified away by investing in both AP Mller and Danske Invest at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AP Mller and Danske Invest into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AP Mller and Danske Invest Mix, you can compare the effects of market volatilities on AP Mller and Danske Invest and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AP Mller with a short position of Danske Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Mller and Danske Invest.

Diversification Opportunities for AP Mller and Danske Invest

-0.22

Correlation Coefficient

AP Mller  Danske Invest

Very good diversification

The 3 months correlation between MAERSK-B and Danske is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and Danske Invest Mix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danske Invest Mix and AP Mller is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AP Mller are associated (or correlated) with Danske Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danske Invest Mix has no effect on the direction of AP Mller i.e., AP Mller and Danske Invest go up and down completely randomly.

Pair Corralation between AP Mller and Danske Invest

Assuming the 90 days trading horizon AP Mller is expected to generate 10.75 times more return on investment than Danske Invest. However, AP Mller is 10.75 times more volatile than Danske Invest Mix. It trades about 0.09 of its potential returns per unit of risk. Danske Invest Mix is currently generating about -0.07 per unit of risk. If you would invest  1,097,118  in AP Mller on December 26, 2024 and sell it today you would earn a total of  151,382  from holding AP Mller or generate 13.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AP Mller   vs.  Danske Invest Mix

AP Mller

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AP Mller sustained solid returns over the last few months and may actually be approaching a breakup point.

Danske Invest Mix

Risk-Adjusted Performance

Very Weak

Over the last 90 days Danske Invest Mix has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Danske Invest is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AP Mller and Danske Invest

The main advantage of trading using opposite AP Mller and Danske Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Mller position performs unexpectedly, Danske Invest can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Danske Invest will offset losses from the drop in Danske Invest's long position.

The idea behind AP Mller and Danske Invest Mix pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.